lets say you find a property for 50k you plan to fix up and rent. do you need your own cash for the down payment and repairs?

Kenneth, you realize this thread was 21 months old right? Or perhaps that Doug hasn't even visited the site in the last 15 months? Lets stop digging all this stuff up.

The 50% Rule has absolutely nothing to do with the rehab expenses. Getting the property up to rental standards is part of the acquisition cost, not an operating expense. Once you get the property up and running, then the maintenance and capital expenses will be included in the 50% Rule. Good Luck, Mike

Yes, but it is an opportunity to make a comment now. I doubt seriously, that there is any property leased in my county, or adjacent counties, where a proeprty rents for 2% of the purchase price. Much closer to 1 to 1 1/2%. This happens out west and larger cities, but not in the mid-west.

the more units, I think the more it will cash flow .... but I think it's also good to do an actual line by line analysis and then "double check" against the 2% / 50% rule. I'm new, so keep that in mind (2 years). But using those rules in a strict sense, to me, poses the danger of making you "myopic" or tunnel visioned. So with 2%, you'd need to pay no mroe than 40K AFTER REPAIRS for an 800 rental. Possible, but a little more challenging. BUT ... this is where a little more analysis comes in. Here in Central Maine, VERY FEW tenants pay own heat. It's simply not the rule. But with houses, they do, or a duplex with separate heating system. So your expenses should be lower for a unit where you don't pay the utilities. AND at least in my experience, the rent doesn't decrease as much as the savings, so all in all you can pay a LITTLE more per unit for tenant paid utility deals. My two cents.

ok got it, but now an even simpler question. with that 2% rule it says you should rent a property with a total acquisition cost of 60k for a $1200/mo. How reliable is the 2% rule do you always follow it?

Wait... it seems like it would be very hard to find a property that you could use the 2% rule on. wouldn't it always cash flow way more then $100/mo?

so how do you use the 50% rule when after you buy the property you have another 25k for repairs?

yes. unless you are doing a HML loan, then you can typically get some $$ for repairs.

so where do you figure in the repair cost for a house you are planning to rent. like lets say there is a house that is listed at 50k and your mortgage at the full 50k would be $300/mo you would need to get at least $800/mo to rent it out and cash flow the $100. But it needs 10k in repairs before you can rent it and you have to pay for them cash. Would you say the house really cost 60k and you mortgage would be more like $350/mo so now you only would cash flow $50mo at $800/mo rent making it a bad deal?

Where does money come from for repairs in rentalsWhere does money come from for repairs in rentals

Back

Resources & Media

Resource Hub Bookstore Blog Guides Pro-Exclusives PRO Podcasts Pro Partnerships

Events & Training

BPCON2025 Webinars Upcoming Events Free Courses

Strategies

How to Manage Your Rental Property How to Operate a Short-Term Rental How to Passively Invest in Real Estate How to House Hack How Does the BRRRR Method Work How to Flip a House How to Invest in Commercial Real Estate How to Invest in Real Estate How to Invest in Multifamily Real Estate How to Build Wealth

Invest More Confidently

Join the real estate investing community that’s helped thousands of people achieve financial freedom.

Start Free Trial

The Podcast Investors Trust

No fluff. Just deals, strategies, and lessons from the front lines of today's market.

Listen Now

Back

Pick Markets

Market Finder - NEW PRO Picking a Market Workshop PRO Picking a Market Worksheet Top 100 Cash Flow Markets Market Insights - Sunbelt Region

Market finder

Pinpoint the best real estate market for your specific goals with expert recommendations and real-time data on appreciation, affordability, rent-to-price ratio, and more.

Pick Markets

Pro membership

Get unlimited access to tools and resources that make it easier to find, analyze, and manage deals with confidence!

Upgrade to Pro

Back

Find Deals

BiggerDeals Off-Market Deal finding PRO Real Estate Syndications Investor-Friendly Agents Find Foreclosures Community Listings (FSBO) Business Directory

NEW! Find Cash-Flowing Deals Fast

Search nationwide listings with built-in cash flow analysis.

Find Deals

Invelo - off market deals

Scale your portfolio with off-market deals.

Explore Now

Back

Calculators

Rental Property Calculator PRO Rehab Estimator PRO Rent Estimator PRO BRRRR PRO Fix & Flip PRO Short-Term Rental PRO Sell vs. Keep PRO Landlord Insurance Calculator by Steadily All Calculators

Rental property calculator

Is it a good deal? Run your numbers like a pro with this simple yet powerful calculator.

Run the Numbers

Rent estimator

Understand how much rental income you can expect based on recent reports and data for your specific property.

Run Report

Back

Manage Properties

Managing Properties 101 Find a Property Manager RentRedi Property Management Software PRO Baselane Automated Bookkeeping & Banking PRO Property Management Tools Ask a Management Question Finding Tenants Screening Tenants PRO Leases + Landlord Forms PRO Property Insurance Property Maintenance / Rehab PRO

Property management software

Manage tenants, tasks, and your entire portfolio with one simple tool.

Activate Now

Property manager finder

Find reliable property management partnerships that last.

Find a Property Manager

Back

Plans & Pricing

Pro Membership Business Membership

Try PRO for 7 days completly free

Avoid mistakes and make informed decisions with Pro.

Start Free Trial

Grow your business

Promote your business on BiggerPockets and make quality connections with the right investors.

Sign Up Now

Back

For You

Newest Unanswered My Discussions Followed Discussions Followed Categories Followed Locations Followed People

General Real Estate

General Real Estate Investing Starting Out Deal Analysis Buying & Selling Business & Marketing Landlording Property Management Reviews & Feedback

Real Estate Strategies

House Hacking BRRRR Short-Term Rentals Mid-Term Rentals Multi-Family Fix & Flip Other Strategies

Finance & Financing

Lending Creative Finance Personal Finance Taxes & Legal Issues

News & Announcements

Official Site Announcements Market Trends & Data Real Estate News & Current Events Pro Exclusive Area PRO

Events & Networking

Events & Meetups Classifieds

Back

All Books

Best Sellers Browse All New Books & Pre-Orders Bundle & Save Books for Beginners

Unlock hidden potential in every property and maximize returns

This is your creative breakthrough guide to escaping investment paralysis and unlocking hidden profit in any market.

Get Your Copy

Build a Cash-Flowing Glamping Business with High Equity Upside

Whether you're starting from scratch or expanding existing hospitality operations, learn the practical frameworks needed to capitalize on the growing demand for upscale outdoor experiences.

Learn More

Where does money come from for repairs in rentals

Most Popular Reply